Human
The Power of Black Friday: People Spend More in 'Pay-it-Forward'
Catherine Griffin
First Posted: Nov 27, 2013 07:57 AM EST
Black Friday is just around the corner, which means that shoppers will be out in full force to take advantage of the holiday sales. Now, scientists have learned a bit more about human behavior when it comes to spending this season. It turns out that shoppers spend more money when engaged in a chain of goodwill known as "Pay-it-forward" than when they can name their own price.
"It's assumed that consumers are selfish and always looking for the best deal, but when we gave people the option to pay for someone else, they always paid more than what they paid for themselves," said Minah Jung, one of the researchers, in a news release. "People don't want to look cheap. They want to be fair, but they also want to fit in with the social norms."
Pay-it-forward is a pricing scheme in which patrons are told that a previous customer has paid for them. The new customer then gets the opportunity to pay for someone else. These random acts of kindness have been reported at toll bridges, coffee shops and restaurants across the nation. Alternatively, "Pay-what-you-want" is an economically similar approach in which the consumers have the option to pay any price they want.
During the course of eight separate experiments, the researchers compared how more than 2,400 individuals responded to these two elective pricing models at various venues, including a museum and a farmers market. The scientists discovered that at the museum and farmers market, consumers consistently paid more for another customer than for themselves when purchasing a cup of coffee or the price of admission.
In fact, the researchers saw the same behavior in lab settings. Volunteers were given coffee mugs; while some were told they could pay what they wanted for the mug, others were told that someone had paid for them and that they could pay for someone else's mug. It turned out that those who paid it forward spent more, though those who were told exactly what a previous person had spent adjusted their expense accordingly by paying the same amount or a little less.
The findings reveal the power of social norms and the fact that paying it forward could be a useful tool to encourage consumers to spend a bit more.
"The results suggest that businesses that rely entirely on consumers' social preferences can survive and even thrive," said Jung in a news release. "It's pretty amazing."
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First Posted: Nov 27, 2013 07:57 AM EST
Black Friday is just around the corner, which means that shoppers will be out in full force to take advantage of the holiday sales. Now, scientists have learned a bit more about human behavior when it comes to spending this season. It turns out that shoppers spend more money when engaged in a chain of goodwill known as "Pay-it-forward" than when they can name their own price.
"It's assumed that consumers are selfish and always looking for the best deal, but when we gave people the option to pay for someone else, they always paid more than what they paid for themselves," said Minah Jung, one of the researchers, in a news release. "People don't want to look cheap. They want to be fair, but they also want to fit in with the social norms."
Pay-it-forward is a pricing scheme in which patrons are told that a previous customer has paid for them. The new customer then gets the opportunity to pay for someone else. These random acts of kindness have been reported at toll bridges, coffee shops and restaurants across the nation. Alternatively, "Pay-what-you-want" is an economically similar approach in which the consumers have the option to pay any price they want.
During the course of eight separate experiments, the researchers compared how more than 2,400 individuals responded to these two elective pricing models at various venues, including a museum and a farmers market. The scientists discovered that at the museum and farmers market, consumers consistently paid more for another customer than for themselves when purchasing a cup of coffee or the price of admission.
In fact, the researchers saw the same behavior in lab settings. Volunteers were given coffee mugs; while some were told they could pay what they wanted for the mug, others were told that someone had paid for them and that they could pay for someone else's mug. It turned out that those who paid it forward spent more, though those who were told exactly what a previous person had spent adjusted their expense accordingly by paying the same amount or a little less.
The findings reveal the power of social norms and the fact that paying it forward could be a useful tool to encourage consumers to spend a bit more.
"The results suggest that businesses that rely entirely on consumers' social preferences can survive and even thrive," said Jung in a news release. "It's pretty amazing."
See Now: NASA's Juno Spacecraft's Rendezvous With Jupiter's Mammoth Cyclone